Today’s healthcare consumer has many options when it comes to health insurance. If you are your family needs low cost health insurance or is living without health insurance, you may be wondering if a limited benefit plan would work for you. Because these plans offer limited coverage — as their namesake suggests — it’s important to properly educate yourself before investing in such a policy.

What is a Limited Benefit Plan?

Referred to commonly as a “bare bones” plan, limited benefit plans have a reduced number of covered services than traditional comprehensive health plans. This is done strategically in order to reduce the premiums paid by the insured. Other names used for a limited benefit plan include flexible benefit, mandate-free, mandate-light and minimum benefit.

While the coverage of limited benefits plans vary by policy, these plans generally have daily or annual limitations on office visits, prescription medications, hospital care and surgical services. In some cases, the plan may require that an annual deductible be met before any further medical care is covered.

A limited benefit plan may offer coverage for a specific health condition or medical setting. For instance, some limited benefit health insurance plans only cover specified diseases, while another may be specifically for accident coverage.

The self-employed as well as employers who have part-time, contract-workers, or lower wage employers are gaining interest in limited benefit plans.

Considerations of a Limited Benefit Plan

It’s important to know that a limited benefit health plan is not intended to be your sole health insurance plan or alternative to a comprehensive health insurance plan. Instead, limited benefit plans are designed to supplement your comprehensive health plan.

While limited benefit plans may have lower premiums, they also typically have higher deductibles, co-payments, and co-insurance percentages than other comprehensive health plans.

Restrictions of a Limited Benefit Plan

Limited benefit health plans typically cover fewer medical procedures and types of medical expenses than traditional comprehensive health insurance policies. What this comes down to is limits in terms of amounts the insurer will pay per episode. There’s also usually limitations with respect to preventative care, testing, emergency benefits, and surgical coverage. Many limited benefit plans exclude major health catastrophe events, such as cancer.

Limited benefits plan have “caps”, or low maximum benefit limits on specific types of medical care, which means you can quickly reach your cap, causing to foot the rest of the bill. Some plans offer the insured the ability to pay more to up their cap.

Before determining if a limited benefit plan is the right choice for, make sure you understand the plans limitations and assess your current and potential future medical needs. Limited benefits plans are one option for individuals to obtain limited health insurance coverage, but restrictions and limitations must be understood.